Tesco will increase hourly pay for hundreds of thousands of workers from 29 March as part of a £200 million investment, lifting rates by 5.1 per cent ahead of changes to the national living wage.

Store staff and online fulfilment workers will see pay rise to £13.28 an hour, while employees within the M25 will earn £14.55, including a £1.27 London allowance. The new rates exceed the £12.71 statutory minimum for workers aged 21 and over, which takes effect in April.

The move forms part of a broader effort by the UK’s largest supermarket to strengthen its position in a competitive labour market. Tesco said hourly-paid colleagues have received a 43 per cent increase over the past five years, alongside expanded benefits such as enhanced family leave, a virtual GP service and staff discounts.

Ashwin Prasad, Tesco UK chief executive, said the increase reflects the role of frontline staff, adding: “Our colleagues play a vital role in delivering for our customers every single day. This pay deal represents another meaningful investment in colleague pay and reinforces Tesco as a place where people can build a rewarding, long-term career.”

The pay rise comes as major supermarket rivals also raise wages, intensifying competition across the sector. Sainsbury’s has lifted hourly pay by 5 per cent to £13.23 nationally and £14.54 in London, while Lidl has increased entry-level rates to £13.45 and £14.80 respectively. Aldi is set to offer £13.50 nationally and £14.88 in London from April, positioning it as the highest-paying large supermarket.

According to Tesco, the agreement was reached with trade union Usdaw and includes additional support measures for employees. The retailer said it plans to introduce a domestic abuse policy later this year, offering up to three days of paid leave for affected staff.

Daniel Adams, national officer at Usdaw, said the deal strengthens pay relative to statutory levels, stating: “This deal not only delivers a real-terms increase to wages but extends the gap between Tesco rates of pay and the national living wage.” He added that the commitment to paid leave for domestic abuse “could make a significant difference” to workers.

---